Macau Business Daily, Sept 2nd, 2014

MOP 6.00 Closing editor: Sara Farr

M

acau casinos raked in MOP28.9 billion in August. But still 6.1 percent less than a year ago. It’s also the third consecutive month gaming revenue growth has dropped Y-O-Y. Regardless, revenues have increased 8.1 percent since the beginning of the year.

And analysts predict a pick-up in October. Meanwhile, Sands China has replaced SJM in terms of largest market share. Together, they account for 47 percent of the total pie Page 5

www.macaubusinessdaily.com

Year III

Number 617 Tuesday September 2, 2014

Publisher: Paulo A. Azevedo

Punters reloading for October

Polytec Assets H1 results tank 50pct

Technical glitch

Page 2

Macau awaits the launch of the mobile e-wallet. But issues remain with the installation of the underground fibre optic network. Tradelink tells Business Daily that its local partner here – MTEL Telecommunication – is busy ‘on its government project’.

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NAPE homes most expensive Page 3

HSI - Movers

3

September 1

Calling on UAE

Name

IPIM wants to get the message out.

Last week’s target was the United Arab Emirates. Representatives of the Macau Trade and Investment Promotion Institute visited Abu Dhabi and Dubai on a three-day business trip. The goal is to get businessmen and entrepreneurs to check out the SAR. Investment opportunities is the name of the game Page 3

%Day

Lenovo Group Ltd

3.55

Power Assets Holdin

2.83

Want Want China H

2.08

PetroChina Co Ltd

2.00

Hutchison Whampoa L

1.79

Hong Kong Exchang

-1.68

China Unicom HK

-1.74

Hang Lung Properties

-1.76

Galaxy Entertainmen

-2.91

Sands China Ltd

-3.17

Source: Bloomberg

You lookin’ at me?

I SSN 2226-8294

Studio City is slated to open in mid2015. And a Martin Scorsese short is in the works for the launch. Hollywood heavies DeNiro, DiCaprio and Pitt are lined up. To be bankrolled, in part, by James Packer and Lawrence Ho, cochairs of Melco Crown Entertainment.

The script was written by Wolf of Wall Street scribe Terence Winter Page 6

Brickbats & bouquets Bad press continues to dog Macau’s taxi drivers. Online agony aunt Macau Taxi Driver Shame shares the pain, and the occasional thumbs-up. The blacklist is miles longer than the ‘whitelist’, and some enterprising drivers have made both. The government is currently conducting a public consultation on taxis, which ends September 25

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September 2, 2014

Macau

Polytec Assets H1 results tank 50pct

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he performance of Hong Kong-listed developer Polytec Asset Holdings Ltd turned south during the first half of the year, with net profit attributable to equity holders decreasing 50 percent yearon-year to HK$29.2 million, although underlying net profit improved.

The developer explained in its latest filing to the Hong Kong Stock Exchange last Saturday that the significant decline in the interim net profit is due to the revaluation gains from its investment property portfolio; meanwhile, its oil production in Kazakhstan continued suspension during the first six months of the year.

However, the group’s underlying net profit for the first half of the year did improve to HK$10.3 million, compared to a net loss of HK$37.5 million in the first half of last year. The improvement is primarily due to the group’s disposal of certain car parking spaces in Va Iong in Macau and a residential development project in Tuen Mun in Hong Kong, which amounted to

HK$23.7 million, according to the filing.

In addition, increased rents from Macau Square, which is 50 percent owned by the group, also helped its share of gross rental income jump 9.8 percent year-onyear to HK$26.7 million.

Meanwhile, the group revealed that its two luxury residential and commercial projects in the Orient Pearl District of the city - Pearl Horizon and Lotes T + T1 - will re-launch its presale programmes following two years of construction.

The pre-sale programmes of the projects were put on hold following the introduction of new laws on property sale activities in June. The foundation work of Pearl Horizon will start soon, while that of Lotes T + T1 commenced in the fourth quarter of last year, according to the group.

The developer, facing a big drop in its interim net profit, says that it remains optimistic about the medium and long-term economic development of Macau.

K.L.

Auto Italia posts HK$130.2mln profit

A

uto Italia Holdings Ltd posted a gross profit of HK$130.2 million in the six months ended June 30.

The company, whose principal activity is investment holdings, has subsidiaries engaged in the import, marketing and distribution of Italian car brands Ferrari and Maserati in Macau and Hong Kong.

According to a company filing with the Hong Kong Stock Exchange, the group

said ‘Ferrari sales in the first half of 2014 started slowly as compared to the corresponding period in 2013.’ This was mainly due to the fact that its latest California T model will only be available for the Hong Kong market in the fourth quarter of the year and that its California 30 model has ceased production. While the California T model was launched in May, the group has already started to receive orders and delivery is

forecast for the first quarter of 2015, according to the filing.

In addition, the sales performance of the Maserati fared well in the first six months of the year compared with that of the previous year, ‘with a growth of more than twofold in unit sales,’ the filing reads. ‘The portfolio in all model ranges remains strong and we anticipate that the brand will achieve an overall segment share of over 10 percent in 2014.’

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September 2, 2014

Macau

Technical glitches hit Tradelink’s mobile e-wallet launch Technical issues still stand in the way of the launch of the mobile wallet usable on smartphones and tablet computers, according to Hong Kong-based Tradelink Stephanie Lai

sw.lai@macaubusinessdaily.com

T

he busy ongoing works of setting up an underground fibre optic network of local partner MTEL Telecommunication Company Ltd has kept it from promoting the mobile e-wallet here and launching the product soon, product developer Tradelink Electronic Commerce Ltd told Business Daily.

Hong Kong-based Tradelink Electronic Commerce said in its interim results filing with the Hong Kong Stock Exchange last week that the company had encountered further delays in launching its ‘mobile wallet solution’ – a plug-in device that enables e-payment on smartphones or tablet computers – in both Hong Kong and Macau.

‘The original schedule of a November 2013 launch was delayed, first to this Spring and now to early Q3, mainly because of technical and other procedural issues at the client end,’ Tradelink said, referring to delay in the mobile wallet launch in Hong Kong due to technical issues encountered at the banks’ end. ‘These issues have now all been resolved and two banks have made a soft internal launch to test usage

We have yet to clarify how Tradelink can supply us with the platform to promote the product here, and at what cost and to identify operational issues before their formal launches, currently scheduled for Q3 2014.’

Tradelink also noted in the filing that ‘little progress’ has been made regarding the launching of the mobile wallet in Macau, regarding which the company said it was considering ‘ways and means of kick-starting the project’ in the Macau market.

Originally scheduled to be usable in Macau by the first quarter of this year, the Tradelink mobile wallet was to be promoted h ere b y loca l p a r tn er MTEL Telecommunication Company Ltd. MTEL obtained a fixed-line

Michael Choi, MTEL

telecommunications licence in June last year and was allowed 18 months to ensure its network covered 30 percent of local households.

‘As our business partner is busy on its government project, there has been little progress in the mobile e-wallet project in Macau,’ Tradelink told Business Daily in an email reply, referring to the project of installing underground cables.

However, chairman and

chief executive of Tradelink’s local partner MTEL Michael Choi told Business Daily that his company’s ongoing cable laying project is not the main reason that the launch of the mobile wallet project has been delayed here.

“We have yet to clarify how Tradelink can supply us with the platform to promote the product here, and at what cost,” Mr. Choi told us briefly on the phone yesterday.

“We’re still waiting for Tradelink to supply us with the equipment needed to promote the product; namely, the fact that we have to have servers here as well as the audio jacks – the plug-in for the mobile wallet.”

In November last year, Tradelink announced that the plug-in device for the mobile wallet product could support as many as six credit cards, such as Visa, UnionPay and MasterCard, along with prepaid cards and e-vouchers.

The operation of the mobile wallet is independent of the telecommunication operator and is not limited to any smartphone models running on most iOS or Android systems, Tradelink said at the time. The company’s contactless payment technology has

The President of the Macau Trade and Investment Promotion Institute has been on a three-day trip to the United Arab Emirates soliciting foreign investment for Macau João Santos Filipe

jsfilipe@macaubusinessdaily.com

T

is currently at a very low 1.7 percent.

Our major revenue comes from the servicing industry, and we have a large number of high class hotels to attract a steady stream of tourists throughout the year.”

Mr. Chang stressed that corporate and income tax in Macau is a maximum 12 percent and that the region is import and export tax-free. He also said that the region is investing in the meetings, incentives, conferences and exhibitions (MICE) industry in order to attract business travellers.

“Like Dubai and Abu Dhabi, we’re hoping to attract a large number of businessmen by providing a platform to host an increasing number of international events and exhibitions.

On-track innovations The wave device connects to the handset’s operating system via the audio jack, allowing for PIN code authentication, reloading cash electronically and checking available balances.

Business Daily asked Tradelink which banks have agreed to cooperate with the mobile payment project here but the company said the information would only be revealed later.

In the interim results filing and previous press briefings, Tradelink said that the mobile wallet solution is actually operating as a single mobile e-wallet that can be used in Hong Kong, Macau, Taiwan and mainland China.

‘A proof-of-concept launch of the product was undertaken in June in the PRC in conjunction with our partner there and we are awaiting its results,’ Tradelink noted in its filing.

‘If successful, this will bring our concept of a greater China mobile wallet solution one step closer as Taiwan has set up a government sponsored joint venture with the banks there to launch the mobile wallet concept by the end of this year.’

NAPE homes most expensive

Macau alerts UAE to investment opportunities

he president of the Macau Trade and Investment Promotion Institute (IPIM), Jackson Chang, spent the weekend on a threeday trip to the United Arab Emirates (UAE) in order to explore bilateral opportunities in the region and attract foreign investment to Macau.

According to Dubai newspaper Khaleej Times, Mr. Chang explained to Dubai businessmen and entrepreneurs that there are numerous opportunities for them to start operating in Macau.

“There are various developments that are currently underway in Macau at the moment, and as a result we’re achieving an average GDP growth of 14 per cent every year,” said Chang.

“In addition, our unemployment rate

adopted the patented Wave device from the Israeli vendor.

Other sectors that we will be focusing on are the hospitality, healthcare, and food and beverage industries,” said Chang.

During a business seminar on Sunday, the IPIM president revealed that the Special Administrative Region of Macau is keen on increasing the number of international visitors in the coming years, according to Khaleej Times.

At the end of the meeting, Mr. Chang invited Dubai’s businessmen to come and visit Macau in order to study for themselves the opportunities that are available. He also said that IPIM would be willing to provide services and technical assistance for those interested in investing in the territory.

P

roperty prices in the Nape area remained the highest throughout the month of July, according to the latest official figures released by the Financial Services Bureau (DSF).

The average price per square metre in the area was MOP133,537 while the average usable floor area was some 122 square metres. In addition, the higher the floor, the more expensive the residential property, with the maximum price recorded per square metre in this area reaching MOP186,633 for an average floor space of 98 square metres.

Properties in Taipa Grande and the Pac On area were second most expensive, with prices per square metre reaching MOP131,389 for a home with a total floor area of 142 square metres. Downtown Taipa also recorded property transactions above the MOP100,000 per square metre mark. The average price in this area was MOP109,594, while the average home size was 87 square metres.

On the Macau Peninsula, the second most expensive district was the new area in Areia Preta, with property transactions averaging MOP106,368 per square metre for an average residential unit of 71 square metres. For the most part, the higher the floor in a residential building the more expensive.

4

September 2, 2014

Macau

Gone fishing: Taxis blacklisted online The refusal of some taxi drivers to drive local passengers has become so serious an online group has been created for locals to blacklist them Kam Leong

kamleong@macaubusinessdaily.com

much higher than the original cost.

Other complaints primarily target the drivers’ attitude and driving.

MTDS claims that the blacklist is not used to ‘forever ruin the reputation of any particular taxi driver’ but to encourage the ongoing reform and improvement of the taxi industry here in the city.

Ironically, three taxi plate numbers are featured on both the blacklist and whitelist.

Action before amended regulation

M

ore than 2,000 people have joined an online Facebook group established to collect local taxi experiences. The group, which was founded two months ago, received a total of 141 reports by August 28. However, 85 percent of these reports were complaints about the taxi services or drivers in the city, with a majority expressing their dissatisfaction with drivers’ ‘fishing’ – overcharging or refusing to serve.

This group - called Macau Taxi Driver Shame (MTDS) - is creating a blacklist and a whitelist for local passengers to report their good or

bad experiences of taxi service by offering details, comments and plate numbers of the taxis involved.

Andrew Scott, the administrator of the group, claimed in a press release that 120 drivers have made the blacklist, while a paltry 21 feature on the ‘whitelist’ since the group was established on June 30.

According to the group’s press release, some 78 percent of the problems reported on the blacklist involve the fishing problem, which refers to taxi drivers who refuse to offer service if passengers do not pay the fee set up by the drivers – usually

Chairman of the Macau Taxi Drivers Mutual Association, Tony Kuok Leong Son, told Business Daily that the overcharging problem by some taxi drivers does exist in the city, particularly near the properties of the six gaming companies. However, the government can always take action to combat such issues when they deepen the co-operation between departments.

As a member of the Traffic Affairs Consultative Committee, Mr. Kuok said that the government does not have to wait for the amendments to current taxi regulations to extend the

effectiveness of resolving the issue.

“For example, police should impose fines on taxi drivers right away when they see them waiting on the yellow lines,” Mr. Kuok said, claiming that drivers who do not wait at the spots allocated to them by the casinos but the yellow lines nearby are usually ‘fishing’ for mainland Chinese tourists.

The chairman of the taxi labour union also revealed that some casinos have taken internal measures to resolve the problem of drivers bilking tourists.

Although there are drivers violating the taxi regulations by socalled fishing, the general public here should also note that many mainland tourists are actually willing to bribe them, said Mr. Kuok, a practice which has “spoiled” many of the drivers.

In addition, he says, “people always tend to report bad things rather than good things”.

In June, the government announced it would comprehensively review the current taxi regulations by introducing initiatives such as sting operations and increasing fines for drivers flouting the rules. The public consultation ends on September 25.

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September 2, 2014

Macau

Gaming revenue drops 6.1pct For the first time since June 2009 gross gaming revenue shrunk in year-on‑year terms for the third consecutive month. For gaming analysts, VIP fatigue, Beijing’s anti-graft policy and a slowdown in mass market growth are the causes of such results João Santos Filipe

jsfilipe@macaubusinessdaily.com

M

acau’s gross gaming revenue (GGR) dropped 6.1 percent year-on-year to 28.9 billion patacas during August from 30.8 billion patacas in the same month in 2013, the Gaming Inspection and Coordination Bureau (DICJ) revealed yesterday. This is the first time since June 2009 that GGR has fallen in year-on-year terms for three consecutive months.

From December 2008 to June 2009, gross gaming revenue fell for seven consecutive months, during the financial crisis in the United States. Since June this year, however, GGR has been falling year-on-year by 3.7 percent, 3.6 percent and last month 6.1 percent.

In spite of the three-month consecutive drop, since the beginning of the year gaming revenues have increased at an 8.1 percent rate from 231.7 billion

patacas to 250.3 billion patacas this year.

VIP decline, shy mass market According to Union Gaming analysts Grant Govertsen and Felicity Chiang, the gaming industry is suffering from VIP gaming slowdown, mainly caused

by Beijing’s anti-graft crackdown, and also because the mass market has been growing at a slower than expected rate.

“The VIP segment remains weak, which we believe is driven by a confluence of factors with the largest driver being the broader PRC anticorruption crackdown”, the analysts said, adding that the recovery may only surge in early 2015, despite a strong VIP showing in the October holiday period that may translate into a false expectation of recovery.

The mass market, however, has

been growing, with Union Gaming analysts believing it is reaching the mid to high-teens, as happened during the month of July.

“We believe mass [market] is being impacted by: World Cup as some segment of customers stays at home and are ‘reloading’ before coming back to Macau; general fatigue as it has been more than two years since any new product [was introduced] in Macau; pockets of economic weakness; signs of a changing customer demographic with a more-casual gambler filling rooms that heretofore were filled by traditional gamblers”, they explained.

The World Cup effect is only expected to finish about Golden Week in the first days of October.

VIP players avoiding Macau Deutsche Bank analyst Karen Tang also characterised the results of the

industry as a slowdown in mass market growth and “weak” VIP gross gaming revenue.

“By segment, we think VIP stayed weak at mid-teens year-on-year decline (same as June-July) while mass continued to disappoint with mid-teens year-on-year growth (vs.

32 percent year-on-year in 1H, 16 percent year-on-year in July).”

According to the German banking firm, the VIP segment is now facing a different problem. While in the past there was a credit challenge, now it is about demand.

“Junkets noticed that VIP players from Guangdong had come less over the past two months. Players prefer to stay low profile now, especially after the recent anti-graft arrests in Guangdong and Shanxi. VIP weakness has now changed from a ‘supply-side’ (credit) problem into a ‘demand-side’ problem”, they concluded.

VIP decline drags SJM down

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he VIP segment decline during August has pushed SJM Holdings out of the first place in terms of market share in the Macau gaming industry. According

to Business Daily calculations, Sands China is the new leader in terms of market share with 24.6 percent. Last month, the company owned by Sheldon Adelson had a

it occupied 24.1, a 1.7 percent drop.

Galaxy Entertainment Group held third position, increasing its market share to 13 percent from 12.4 percent in July.

Melco Crown, the joint venture between Lawrence Ho and Australian billionaire James Packer, ranks fourth with a 13 percent market share. In Market Share Per Operator (2013-2014) July, the company that owns City of

Dreams and Altira achieved a market share of 12.4 percent.

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug The company controlled by Steve SJM 24% 25% 26% 23% 24% 23% 22% 24% 25% 23% 25% 24% 22% Wynn was also affected by the decline Sands China 23% 22% 20% 22% 23% 22% 25% 22% 22% 23% 22% 23% 25% in the VIP segment and as a result its market share shrunk by one percent Galaxy 17% 19% 21% 19% 18% 20% 21% 20% 19% 21% 21% 21% 21% from 11.1 percent to 10.1 percent.

Wynn 12% 11% 10% 11% 11% 9% 11% 12% 11% 10% 9.5% 11% 10% Although MGM occupies last place MPEL 14% 14% 13% 14% 14% 14% 12% 13% 14% 12.5% 12% 12% 13% in the market the company managed to improve its market share from MGM 10% 10% 9% 11% 10% 11% 9% 9% 10% 9% 10% 9% 9% 8.7 percent in July to 8.9 percent Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% in August. * Figures are rounded to nearest unit, therefore they may not add exactly to the rounded total

23.1 percent share.

The gaming concessionaire founded by Stanley Ho, SJM, now resides in second place with a market share of 22.4 percent, when in July

J.F.

6

September 2, 2014

Macau Brands

Trends

Over the moon Raquel Dias newsdesk@macaubusinessdaily.com

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he famous Mid-Autumn Festival is coming to town and there’s no better way to celebrate the Autumn Equinox than with something sweet. Moon cakes are made to an ancient recipe but like any successful tradition they have adapted to modern times and different tastes. Right now there are so many options on the market that the difficulty comes in choosing the right one. If before the difference was only the box, nowadays you can choose from ‘ice cream’-like cakes to chocolate-flavoured confections. You still have the traditional sesame paste with egg yolk options but there’s a world out there for those who like a change.

One of the most exuberant choices we found on the market has to be the Grand Hyatt Macau special moon cake selection. The crisp, chic moon cake gift boxes are exclusive to the hotel and come in a variety of motifs. Choose between fashionable leopard print and two floral designs. Each gift box includes three new flavours of unique French-style moon cakes. French pastry chef Laurent Merdy has created new flavours: vanilla sesame custard, salted egg custard and chocolate fondant.

Scorsese short to launch Studio City

W

hen Studio City opens next year in Cotai it will feature a short film directed by Martin Scorsese as a campaign for Melco Crown Entertainment’s newest property.

Deadline Hollywood, an online film and entertainment industry source, reported that RatPac Entertainment is producing the short which will feature big-name actors such as Robert DeNiro, Leonardo DiCaprio and Brad Pitt.

According to the report, the script was written by Wolf of Wall Street scribe and Boardwalk Empire creator Terence Winter. In addition

to RatPac’s Brett Ratner and RSA’s Jules Daly, Lawrence Ho and James Packer – co-chairmen of Melco Crown Entertainment – will be executive producers of Scorsese’s short.

The short film is set to premier next year at the opening of Studio City, which is slated to open mid-2015.

The total budget for Studio City has increased to US$2.3 billion (MOP18.4 billion) from the original planned cost of US$2.0 billion (MOP16 billion). However, this cost may not be final, according to a company filing last week with

the Hong Kong Stock Exchange.

‘This cost estimate may be revised depending on a number of variables, including receipt of all necessary governmental approvals, the final design and development plan, funding costs, the availability of financing on terms acceptable to us, and prevailing market conditions’, the filing reads.

Studio City will be a large-scale integrated entertainment, retail and gaming resort. The mid-year opening date may be changed due to delays such as governmental approvals.

S.F.

HSBC, Nomura lose bid to avoid U.S. agency’s mortgage lawsuits

A

U.S. regulator can proceed with lawsuits accusing HSBC Holdings Plc and Nomura Holdings Inc of misleading Fannie Mae and Freddie Mac into buying mortgage-backed securities that later turned toxic, a federal judge ruled.

The decision from U.S. District Judge Denise Cote in Manhattan clears the way for HSBC to face trial September 29 in a case by the Federal Housing Finance Agency that the bank has estimated could expose it to US$1.6 billion in liability.

FHFA launched 18 lawsuits in 2011 over about US$200 billion in mortgage-backed securities. HSBC, Nomura and Royal Bank of Scotland Group Plc are the remaining banks being sued by the regulator.

Other banks have settled ahead of trial, enabling the FHFA to recover US$17.3 billion. Goldman Sachs Group Inc became the latest to settle last Friday, agreeing to a deal the

FHFA valued at US$1.2 billion.

In 2012, Cote issued a key ruling in the litigation, rejecting an argument

by UBS AG that the case against it was untimely.

The 2nd U.S. Circuit Court of Appeals in New York upheld Cote’s decision in 2013. UBS later settled for US$885 million, but the ruling’s rationale was applied to the remaining cases.

In June, however, the U.S. Supreme Court issued a ruling in an environmental case, CTS v.

Waldburger, which raised similar questions about the timing of lawsuits.

The decision prompted the remaining banks in the FHFA litigation to urge Cote to reconsider her ruling or alternatively allow them to immediately appeal.

But Cote last week said “it is clear that CTS does not disturb that decision.”

The judge’s ruling affirmed her

earlier finding that a law passed in 2008 that established the FHFA in the wake of the financial crisis extended the period of time the agency had to bring lawsuits.

Cote also rejected the banks’ request to immediately appeal her 2012 ruling as “inappropriate,” noting how soon the trials in the HSBC and Nomura cases are set to begin.

“The parties will soon be able to appeal this issue, together with all other issues, following a final judgment,” she wrote. “The most efficient way to reach the ultimate termination of this litigation is to try these cases.”

Representatives for HSBC and the FHFA declined comment.

Representatives for Nomura and RBS, which is a defendant in the case against Nomura, did not immediately respond to requests for comment.

Reuters

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September 2, 2014

Gaming

HK stocks rise as China PMI reports fuel stimulus bets

H

ong Kong stocks advanced, after the benchmark index posted its steepest weekly drop since May, as weaker-thanexpected China manufacturing data boosted speculation the government will add stimulus.

An official gauge of China’s factory activity declined to 51.1 in August, compared with the median estimate of 51.2 in a Bloomberg survey and 51.7 the previous month. A final purchasing managers’ index from HSBC Holdings Plc and Markit Economics fell to 50.2 after a preliminary figure of 50.3 for the period. Readings above 50 indicate growth.

The Hang Seng Index rose 0.2 percent to 24,784.56 at the break in Hong Kong after falling as much as

0.2 percent. The Hang Seng China Enterprises Index, also known as the H-share gauge, fell 0.3 percent to 10,930.75.

“People expect there will be some stimulus measures launched by the Chinese government as the economy is not as strong as expected,” said Sam Chi Yung, a strategist at Delta Asia Securities Ltd. “Since it’s a holiday in the U.S., this may reduce turnover in Hong Kong, making the market more volatile.”

Want Want China Holdings Ltd., a maker of snacks and beverages, climbed 2.4 percent after last week falling to its lowest since September 2012. Dongfeng Motor Group Co. advanced 1.5 percent after the mainland automaker reported higher

first- half profit. Sands China Ltd. led declines ahead of the scheduled release of Macau casino revenue figures today.

Stimulus bets Hong Kong’s benchmark index last week posted its first monthly drop since April after a 6.8 percent rally in July. Investors are weighing whether mainland policy makers will add stimulus amid slumping credit growth and housing prices. The gauge traded at 11.4 times estimated earnings at the last close, compared with 7.6 for the H-share gauge and 16.8 on the Standard & Poor’s 500 Index.

China may step up action in coming weeks as today’s PMI numbers

confirmed that the economic recovery is weak, Lu Ting, Bank of America Merrill Lynch Hong’s Kong-based head of Greater China economics, wrote in a report today.

Brokerages in Hong Kong and Shanghai said the first full trial of the cities’ stock-exchange link went smoothly over the weekend, supporting plans to go live in October.

The program offers foreigners unprecedented access to mainland equities.

Hong Kong’s stock exchange is seeking views on loosening shareholder voting rules, issuing a “concept paper” last week.

The city’s regulators rejected the governance structure of Alibaba Group Holding Ltd. this year, prompting the Chinese e- commerce company to turn to the U.S. for its initial public offering.

Gaming shares Sands China slid 2.6 percent to HK$49.20. Galaxy Entertainment Group Ltd., a casino operator controlled by billionaire Lui Che-woo, retreated 1.8 percent to HK$57.35.

Real estate developer KWG Property Holding Ltd. extended last week’s drop, falling 4.3 percent to HK$5.39.

Hong Kong’s leadership candidate in 2017 must get the support of a 1,200-member nominating committee, according to a National People’s Congress statement after the framework was approved yesterday.

Protest leaders in Hong Kong vowed to start an era of civil disobedience that may bring chaos to one of the world’s financial capitals after they accused China of betraying its promise to deliver free elections.

U.S. markets yesterday are shut for Labour Day. The S&P 500 rose 0.3 percent to a fresh record Aug. 29 amid optimism in the strength of the economy. Reports showed U.S. consumer confidence unexpectedly rose in August, showing a brightening in Americans’ moods as the labour market gains traction.

Bloomberg

Casino proponent wants Japan to allow locals to gamble

A

n advisor to Japanese lawmakers seeking to legalise casinos said last week he wants local gamblers to be allowed in amid media reports that the health ministry is pushing to ban Japanese nationals due to fears about addiction.

Toru Mihara, a professor at the Osaka University of Commerce who helped lawmakers draft the casino bill, told reporters the government should tackle the issue of problem gambling through counselling and other means, and not by imposing a ban.

Mihara’s comments suggest the debate over the casino bill, which is currently in parliament, may be protracted with supporters unwilling to accept any measures that would reduce the number of potential gamblers.

Asked whether he thought casino gambling should be limited to foreigners, Mihara said: “It would be entirely out of the question.”

“I would estimate that about 80

percent of all visitors will be Japanese.

The remainder will be foreigners,” he said.

Prime Minister Shinzo Abe has identified casino resorts as a key feature of his economic growth plan.

Lawmakers are currently discussing an initial bill to allow this form of gambling, and the debate could spill over into an extraordinary session of parliament expected to start in September.

If the initial bill passes, debate will move to a second bill on more detailed regulations, which proponents hope to pass next year. Any delays in the process could dampen the hopes of global casino firms keen to unlock a gaming market in time for the 2020 Tokyo Olympics.

Companies including Las Vegas Sands Corp and Melco Crown Entertainment Ltd are vying to win the first licences to operate casinos in Japan, a market that brokerage CLSA estimates could generate annual revenue of US$40 billion.

Genting profit drops 20 pct on weaker hospitality business

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alaysian conglomerage Genting Bhd reported a 20 percent fall in second-quarter net profit due to lower earnings from its leisure and hospitality business in Malaysia, Britain, the United States and Bahamas.

Net profit declined to 372.0 million ringgit (US$118.1 million) in the April-June period from 466.3 million ringgit in the same quarter a year earlier. Revenue rose 2 percent yearon-year to 4.4 billion ringgit, Genting said in a stock exchange filing.

The company, whose businesses also include plantations, has declared an interim single-tier dividend of 1

sen per share. None was declared during the first half of last year.

Genting, which owns one of the world’s most profitable casinos in Singapore, has been spending heavily to expand its gaming and hospitality businesses in the United States and South Korea.

It is now eyeing Japan, which is preparing to allow casinos to open up and has the potential to become the world’s second-biggest gaming market, worth US$15 billion a year.

Genting shares have fallen 5.85 percent this year to date, compared with a 0.29 percent rise in the Kuala Lumpur benchmark index.

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September 2, 2014

Greater China Economy losing momentum China’s manufacturing slowed more than estimated last month, joining weakerthan-anticipated credit, production and investment data in suggesting the economy is losing momentum.

A pullback in manufacturing, coming as the property market slumps, adds pressure on the government to step up efforts to meet its expansion target of 7.5 percent this year. More stimulus measures will be announced in the next few weeks, said Lu Ting, Bank of America Corp.’s Hong Kong-based head of Greater China economics.

“The two PMIs both show that the current recovery is relatively weak and choppy,” Lu said. Stimulus may include a greater re-lending quota from the central bank, and the government has “pretty firm confidence” it will keep the economy stable, he said.

Banks seek new lending horizons Grappling with a slowing economy, China’s biggest banks are turning their back on mainstay borrowers like manufacturers and courting high growth industries such as healthcare, food and IT in a bid to boost revenue. The shift in focus by the state-owned lenders coincides with a spike in non-performing loans and slower profit growth as China’s vast factory sector flounders. For the first half of this year, the banks reported an increase in bad loans from the Yangtze delta, the country’s main export-focused manufacturing belt, as well as the Bohai industrial rim. China’s biggest bank, the Industrial and Commercial Bank of China , also said 80 percent of new non-performing loans in the second quarter came from manufacturing and wholesale.

Deadline for Microsoft A Chinese anti-trust regulator said yesterday it has given Microsoft Corp 20 days to reply to queries on the compatibility of its Windows operating system and Office software suite amid a probe into the world’s largest software company. The State Administration for Industry and Commerce (SAIC) questioned Microsoft Vice President David Chen and gave the company a deadline to make an explanation, the agency said in a short statement on its website. SAIC also repeated that it suspected the company has not fully disclosed issues relating to the compatability of the software and the operating system.

Pan-Democratic lawmakers protest against the decision by the Standing Committee of the National People’s Congress

Brace for unrest Hong Kong protesters vow showdown over China’s ‘puppet’ plan Fion Li, Jill Mao and David Tweed

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rotesters in Hong Kong vowed to start an era of civil disobedience after China ruled that candidates for the city’s first planned popular election must be screened, dashing demands from democracy activists.

Opposition lawmakers disrupted a speech in Hong Kong by Li Fei, deputy secretary-general of China’s National People’s Congress, as he explained the decision, and police used pepper spray on protesters outside the venue. Activist group

Toyota August sales up 8.9 pct Toyota Motor Corp and its two Chinese joint ventures sold about 78,500 vehicles in China in August, up 8.9 percent from a year earlier, the Japanese automaker said yesterday.

That followed a 1.1 percent year-onyear fall in July and a 7.6 percent drop in June. In the first eight months of the year, Japan’s biggest automaker by sales volume sold about 619,200 vehicles in China, up 9.7 percent from a year earlier. Toyota this year aims to sell more than 1.1 million vehicles in China. If accomplished, this would see the carmaker surpass annual sales of 1 million vehicles in China for the first time, a target it originally aimed for in 2010. Last year, Toyota sold 917,500 vehicles in China. Toyota operates joint ventures in China with China FAW Group Corp and Guangzhou Automobile Group.

Occupy Central With Love and Peace said it will stage a mass occupation of Hong Kong’s business district, without setting a date.

The ruling angered pro-democracy campaigners because it gives the government in Beijing an effective veto over anyone not viewed as friendly to the Communist Party. The division is set to bring chaos to one of the world’s financial capitals, where HSBC Holdings Plc has its Asian offices. China has also threatened to scrap the 2017 election if there’s no agreement.

“Some people in newspapers even warned of an extreme outcome if the central government doesn’t adopt changes,” Li, the NPC official, told the audience of lawmakers and business leaders in the city yesterday.

In response “the central government is determined and will use utmost courage to carry out its decision on Hong Kong,” Li said.

China said candidates for Hong Kong’s leadership poll must be approved by a 1,200-member committee, which opposition lawmakers have criticized as being stacked with business and political elite. The maximum number of contenders will be set at two or three, a limit that has upset activists.

Lawmakers ejected

Leung Chun-ying, Hong Kong’s Chief Executive, speaks during a news conference at the Central Government Offices

Opposition lawmakers shouted slogans and stood in front of Li during his address in Hong Kong. The speech resumed after legislators including Lee Cheuk-yan and Albert Ho, were escorted out of the hall or abandoned the venue near the city’s airport.

“This is not a real election,” said Lee. “Hong Kong people will not accept this.”

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September 2, 2014

Greater China on Sunday, with a sign explaining that an open air heritage space was being constructed to celebrate the bank’s 150th anniversary next year.

Li said yesterday that Hong Kong should move forward on political reforms, according to an e-mailed statement from Cheung Kong.

China’s ruling was welcomed by business groups including the Federation of Hong Kong Industries and Hong Kong General Chamber of Commerce, which have earlier warned that protests will damage the city’s reputation as a financial centre.

A city divided Jerome Taylor

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ong Kong has been plunged into one of the worst political crises since its handover as pro-democracy activists vow to take over the streets of the city’s financial district following Beijing’s refusal to grant citizens full universal suffrage.

International confidence

Police officers manning barricades outside the venue turned back protesters. About 30 demonstrators clashed with police, and there were no arrests so far, Kwok Pak-chung, a district police commander, told reporters.

China’s decision “dashed the hopes” of even the most moderate democracy advocates, said Ivan Choy Chi-keung, a senior lecturer in politics at Chinese University of Hong Kong.

“It’s clear that Beijing won’t allow a pro-democratic candidate in universal suffrage.”

‘Darkest day’ Political unrest and a slowing economy may lead to a “perfect financial storm,” Hong Kong Financial Secretary John Tsang wrote last month. The city cut its economic growth forecast as a slowdown in China crimped the purchases of luxury items and weighed on local sentiment.

“Today is the darkest day in the history of Hong Kong’s democratic development,” Benny Tai Yiu-ting, co-founder of Occupy Central, told reporters on Sunday. “I think now this is the end of any dialogue.”

Obedient citizens will now disobey orders as Hong Kong enters a new era, Tai told cheering supporters gathered amid drizzling rain yesterday. The movement has pledged a series of actions culminating in a mass sitin of at least 10,000 people in the financial district, some of whom will be designated to hand out flowers “If Occupy Central does happens, we believe the SAR government and its well-trained police forces are fully capable of handling” protests, Li said.

Barricades erected In a sign of increasing tension, policemen were seen at regular intervals on the streets of the business district yesterday, and barricades were erected outside buildings including the Cheung Kong Centre, owned by Asia’s richest man, Li Ka-shing. Scaffolding was erected in the space beneath HSBC’s Asian headquarters in Central

An illegal occupation of the central district will “rock international confidence in Hong Kong’s stability,” Pang Yiu- kai, the chamber’s chairman, said in a statement.

In Washington, the State Department expressed support for the demands of the protesters, saying the election’s legitimacy will be “greatly enhanced” if the people get “a genuine choice of candidates representative of the voters’ will.”

Taiwan’s Mainland Affairs Council yesterday said it feels “regret” over China’s decision to screen candidates for the Hong Kong election, Central News Agency reported.

Leung, Hong Kong’s current leader who was selected by a committee, urged protesters to be peaceful and law-abiding and called the ruling a milestone for Hong Kong and China.

“We cannot afford to stand still on our constitutional development, or else the prosperity and stability of Hong Kong will be at stake,” he told reporters.

Further consultation Leung will hold a second public consultation before introducing a bill to the city’s legislature early next year. He acknowledged it will be difficult to approve the law.

Some pro-democracy Hong Kong lawmakers, including the Civic Party’s Ronny Tong, said the proposal would be rejected. To become law, the universal suffrage bill will require twothirds of the 70-member legislature to support it, meaning the legislation could be halted by the 27 opposition members. If the proposal is rejected, Hong Kong will continue to have its leader picked by a 1,200-member election committee.

“I fear Hong Kong people will just view that they have to take extreme action,” Anson Chan, the city’s former No. 2 official said in a Bloomberg Television interview yesterday. “Too much is at stake. We are fighting for our children’s future.”

Public nomination of candidates -- a demand of some groups -- was also rejected by China as being against the city’s mini- constitution, known as the Basic Law.

U.K. handover The legislation was a democratic development and some opponents failed to recognize the central government’s governance rights in Hong Kong, Li said on Sunday. The city reverted to China from British rule in 1997.

School students and grandmothers were among those who gathered at a rally late yesterday and sat on the grass outside Leung’s office, loudly beating dishes and plates while chanting slogans.

“I’m here to support these students because they are the future,” said Liu Shaoying, a 70-year-old grandmother.

China’s government has “lied to us for 30-odd years and I don’t think I will have another 30,” she said. *With Ting Shi and Clement Tan in Hong Kong, Xin Zhou in Beijing and Jesse Hamilton in Washington.

Protesters attend a rally organized by the Occupy Central with Love and Peace movement outside the Chief Executive office

Why is the city so divided?

Public discontent in the semi-autonomous city is at its highest for years. Rising inequality, competition for resources with mainlanders and the cost of living are partly to blame.

But the crux of the current crisis revolves around perceived political interference by Beijing and a debate over how the city’s next leader will be chosen under planned reforms.

What are the differences?

The current chief executive, Leung Chun-ying, and his predecessors were elected by a pro-Beijing committee. China has promised Hong Kong citizens universal suffrage by 2017. But the disagreement centres over the extent of that universal suffrage.

Under Beijing’s plan citizens will be allowed to elect their leader with a one person one vote system. But only two or three candidates who have been vetted by a nominating committee will be allowed to stand in the first place.

For most of the pro-democracy camp, those restrictions are unacceptable.

They believe a nomination committee would inevitably be stacked in Beijing’s favour, disqualifying any candidate critical of the Communist Party, and fly in the face of their definition of true universal suffrage.

Who are the pro-democracy activists?

Those pressing for greater suffrage are a mixture of law makers, academics, students and ordinary citizens. Younger generations are generally more active in pro-democracy circles than their parents.

The most prominent group is Occupy Central with Love and Peace, a broad network of activists led by two academics and a pastor who have vowed to launch a civil disobedience campaign, including taking over the city’s financial district.

Earlier this year Occupy organised an unofficial referendum in which almost 800,000 citizens voted overwhelmingly in favour of greater democratic freedoms than Beijing is granting.

In an echo of the student-led democracy protests that hit mainland China in 1989, a number of student groups in Hong Kong have also threatened to go on strike later this month.

Is everyone behind Occupy?

Far from it. Last month a network of pro-Beijing groups organised an anti-Occupy protest march that drew tens of thousands of people. The demonstration was marred by allegations that some protesters had been paid to attend while others were bussed in from the mainland.

But the scale nonetheless pointed to unease felt by some Hong Kongers -- particularly in the business community -- about the democracy camp’s confrontational approach towards Beijing.

A number of businesses have taken out adverts in the local press saying the city’s status as an international trading hub is at risk should Occupy go ahead with its takeover.

What will happen next?

Unless a compromise is found it is likely Occupy will press ahead with various forms of direct action.

Co-founder Benny Tai said earlier this week that they would start “wave after wave” of protests and acts of civil disobedience, eventually culminating in the occupation of the financial district.

Much will depend on how the authorities respond. Hong Kong’s police have said they are adequately prepared for any protests and will not hesitate in arresting anyone committing illegal acts.

Meanwhile, Beijing’s version of universal suffrage still needs to be approved by two thirds of the city’s legislature after a fresh round of public consultation.

Pan-democrat lawmakers have vowed to vote against the package because it does not go far enough.

But Beijing has insisted that failure to pass its version of universal suffrage by 2017 will result in the city’s next leader being chosen as they always have -- by a pro-Beijing committee.

AFP

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September 2, 2014

Greater China

Problems at home Property slowdown leads to record overseas loans Christopher Langner

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ash-strapped Chinese developers are borrowing a record amount in the offshore loan market this year, adding to the highest debt loads since 2005.

Homebuilders in the world’s second-largest economy got US$5.9 billion from foreign banks, up 39 percent from the same period last year, according to data compiled

by Bloomberg. Builder debt has soared to 128 percent of equity, the highest since 2005, according to a Bloomberg Intelligence gauge of 84 companies. New home prices fell in July in almost all cities the government tracks and developers are missing sales targets.

“Higher leverage on the balance sheet will give developers a higher financial burden,” said Agnes Wong, credit strategist at Nomura Holdings Inc. in Hong Kong. “That means that if presales are not going as quick as they expect it can translate into trouble more easily than before.”

Premier Li Keqiang is allowing builders to expand financing channels in a bid to stem the slowdown in an economy that derived 16 percent of its growth from property development last year, according to the World Bank. Sino-Ocean Land Holdings

Ltd., whose free cash flow in 2013 dropped to a third of the previous year, led the borrowing with an US$800 million loan.

Sales slide China’s home sales fell 10.5 percent in the first seven months of the year compared to the same period in 2013 to 3 trillion yuan (US$488 billion), Moody’s Investors Service said last week. New construction declined 20 percent across the country, according to a report from Fitch Ratings.

Central China Real Estate Ltd., Poly Property Group Co. and Yuexiu Property Co. Ltd. were among companies taking loans offshore this year.

Pressure on real estate companies was underscored by the collapse in March of Zhejiang Xingrun Real Estate Co. Developers including China Vanke Co., the nation’s biggest, and Greentown China Holdings Ltd., the largest in the eastern province of Zhejiang, have cut prices since then to boost sales.

The slump comes as economic growth is set to cool to 7.4 percent this year, the slowest in more than two decades, according to the median estimate of economists surveyed by

Bloomberg. The Purchasing Managers’ Index, a gauge of manufacturing, fell to 51.1 for August from 51.7 in July, data yesterday showed. The yuan has fallen 1.4 percent against the dollar this year, making it the worstperforming major Asian currency.

New channels Standard & Poor’s has reduced ratings for six Chinese property companies and increased them for two this year.

That compares with two upgrades and two downgrades in 2013.

The three-year facility by the Beijing-based Sino-Ocean Land, whose projects include the Ocean Landscape residential development in the capital, pays a fixed 3.1 percent coupon. That compares with the 4.5 percent yield on the company’s 2019 dollar bonds, according to prices compiled by Bloomberg.

Lenders in Asia are extending more credit to high-yield companies as they seek to increase returns as central banks in the U.S., Europe and Japan keep benchmark interest rates near zero.

“Banks often will understand the credit better and will be able to get ancillary business from the same company so they can price a little bit cheaper,” Hong Kong-based Sonia Li, head of syndicated loans of JPMorgan Chase & Co. in Asia, said in a phone interview on Aug. 19.

Costs decline Cheaper borrowing from global banks that until five years ago didn’t lend to high-yield developers from China is a positive development, Owen Gallimore, the Singaporebased credit strategist at Australia & New Zealand Banking Co., said in a phone interview.

Chinese real estate companies have increased dollar- denominated bond issuance to US$16.5 billion this year, up 38 percent from the same period in 2013.

“Funding and liquidity have also been boosted this year by the strong offshore bond primary market, syndicated loans, and regulatory re-opening of the onshore bond market,” Gallimore said. “Defaults are therefore not likely to spike.”

Property sales may improve for

the remainder of 2014, helped by a rise in mortgage lending and selective loosening of purchases restrictions, Moody’s said in its Aug. 29 report.

Concerns mount The rise in loan funding is cause for concern because it reduces the claims that global bond investors have on the assets of Chinese developers, Nomura’s Wong said. The trend comes just as companies issue more expensive debt in the local market, expanding their overall liabilities, she added.

The overseas borrowing also adds to debtloads exacerbated by increased issuance of securities that have no set maturity dates. Chinese companies are selling a record number of the so-called perpetual notes that can be booked as equity this year, sidestepping government efforts to reduce the world’s biggest corporate borrowings.

That may drive up developers’ financing costs in part because the securities “generally start with a base dividend rate of about 8 percent per annum,” according to a report by analyst Robert Hing Fong. Agile Property Holdings Ltd., which borrowed US$520 million from foreign banks this year, had 4.48 billion yuan of the notes as of June, according to the report.

Chinese property companies may need to raise funds to cushion against any worse-than-expected sales slumps this half, Du Jinsong, an analyst at Credit Suisse Group AG, said in an interview.

The latest sign of demand for fresh funds in the industry came last week when Country Garden Holdings Co., controlled by China’s richest woman Yang Huiyan, announced plans for a share sale. The developer plans to raise HK$3.18 billion (US$410 million) in a discounted share sale to refinance debt, including notes maturing in September, according to a recent filing.

“On one hand it is definitely good that they are still able to get bank money,” Wong at Nomura said about Chinese builders in general. “But on the other hand they now have higher debt sitting on the balance sheet.”

Bloomberg

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Asia

Billions blocked Central bank rule handicaps India’s infrastructure hopes Suvashree Choudhury and Manju Dalal

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central bank ban on Indian banks buying new issues of infrastructure bonds has handicapped Prime Minister Narendra Modi’s chances of gathering billions of dollars needed for mega-projects through the bond market.

Elected in May, Modi has made heavy infrastructure investment and construction of affordable housing for all by 2022 key elements of a reform agenda aimed at getting India’s lumbering economy to grow a lot faster.

Meeting the housing goal alone would need investment of at least US$2 trillion, according to a KPMG report released last month.

Faced with those funding needs, the government in mid-July encouraged banks to issue bonds to fund infrastructure by exempting these bonds from reserve requirements, in order to enable them to extend cheaper loans to the cash-starved sector.

The trouble is the Reserve Bank of India issued guidelines a week later that barred banks from buying bonds issued by other banks in order to forestall risks arising from circular trading, whereby lenders agree to buy each other’s bonds.

The RBI is hoping for greater investor participation by the likes of insurers, pension funds and mutual funds. But, analysts and bankers say the ban hampers secondary market

liquidity and prevents the creation of a deeper market.

Banks are traditionally the biggest buyers of debt, and without them the market for these bonds has become so illiquid that other investors are reluctant to buy.

“Banks are the market makers, the largest investors and underwriters of corporate bonds,” said Shashikant Rathi, head of investments and capital markets at Axis Bank.

“If banks are not allowed to invest in these senior infrastructure bonds then other investors like mutual funds would be sceptical buying them since they wouldn’t be sure of being able to sell them if liquidity need arises,” he said.

Given these constraints, few banks have made fresh issues, despite the incentives, and those that have, have received a lukewarm response.

Analysts said the RBI would have to relax its ban if it wanted bond funding to raise anywhere near the 500-600 billion rupees (US$8.3 billion to US$9.9 billion) in infrastructure bonds that traders say can be raised in the year to March.

Typically, Indian banks are the largest providers of loans to the infrastructure sector. Private or foreign investors have usually shied away due to bottlenecks such as complicated approval processes.

Reuters

Australianww inflation at 7 month low

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private gauge of Australian price pressures showed consumer price inflation at its lowest in seven months in August, a welcome sign of moderation after higher readings in the second quarter.

The TD Securities-Melbourne Institute’s monthly measure of consumer prices was unchanged in August, following a 0.2 percent rise in July. As a result the annual pace of inflation slowed to 2.5 percent, compared to 2.6 percent in July and a top of 3.0 percent in June.

That was the weakest rate since January and right in the middle of the Reserve Bank of Australia’s (RBA) long term target band of 2-3 percent.

The RBA holds its September policy meeting today and is

considered certain to leave interest rates at 2.5 percent, where they have been since it last cut in August 2013.

“The signal from our gauge is that inflation pressures have moderated in the quarter,” said Annette Beacher, TD’s head of Asia-Pacific research.

“The RBA continues to express uncertainty about Australia’s economic health once the mining boom ends, hence for tomorrow’s board meeting we expect more of the same “stability in interest rates”.”

The gauge suggested the official measure of consumer prices (CPI) might rise by only 0.2 percent for the entire third quarter. Such a soft outcome would pull the annual pace down to 2.5 percent, from 3.0 percent in the second quarter.

Reuters

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Asia Indonesia posts small trade surplus Indonesia’s trade balance returned to a small surplus in July due to a sharp fall in imports as economic activity slowed during the Muslim fasting month in Southeast Asia’s largest economy. Data from the statistics bureau showed Indonesia ran a small trade surplus of US$123.7 million in July, compared to a revised deficit of US$288 million the previous month. Analysts polled

by Reuters had expected a US$390 million deficit. The surplus stands in stark contrast to the record US$2.33 billion trade deficit Indonesia posted in July last year. Imports tumbled 19.31 percent on a year-on-year basis, the steepest drop since the global financial crisis, and was worse than the 10 percent fall forecast by the Reuters poll.

Business revamp Samsung to merge shipbuilding, engineering units Kyunghee Park

Bad loan levels not ‘scary’ The level of bad loans at Indian banks is a “concern” but is not “scary”, Reserve Bank of India (RBI) Governor Raghuram Rajan said in a newspaper interview published on Sunday. A prolonged economic slowdown has hit Indian banks’ balance sheets, with stressed loans - those categorised as bad and restructured - amounting to about 10 percent of all loans. Fitch Ratings expects stressed assets to reach 14 percent of loans by March next year.

The bulk of these bad loans are related to infrastructure projects, which have made banks circumspect over lending.

Qantas stays loyal to its frequent flyers Australia’s flagship airline, Qantas Airways Ltd, is making a mint helping other companies keep their customers - even as it struggles to retain the loyalty of its own. Hiding behind Qantas’ staggering A$2.8 billion (US$2.6 billion) headline annual net loss announced last week is a hugely profitable loyalty programme that is the envy of the airline world - and the carrier isn’t letting go. Some investors have urged Qantas to sell all or part of Qantas Frequent Flyer, which is valued as high as A$3 billion. Rival carrier Virgin Australia Holdings announced on Friday it was offloading a stake in its loyalty plan.

Japan auto sales fall to lowest Japan’s auto sales tumbled to a threeyear low last month, the latest sign that consumer spending is slumping in the world’s third-largest economy following a sales-tax increase. Vehicle deliveries fell 9.1 percent from a year earlier to 333,471 units, the lowest since August 2011, according to industry figures released yesterday. Sales rose for seven straight months before the April 1 tax increase. The drop comes amid economic data showing weakness in Japan’s economy. Household spending in July fell 5.9 percent from a year earlier, more than double the expected 2.9 percent decrease.

Further declines would run against Prime Minister Shinzo Abe’s efforts to revive the economy, which contracted the most last quarter since the earthquake and tsunami that ravaged the country’s northeast three years ago.

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amsung Group, whose billionaire chairman has been hospitalized since May, will merge its shipbuilding and engineering units as South Korea’s largest conglomerate prepares for possible succession.

Samsung Heavy Industries Co., the world’s third-largest maker of ships, will combine with Samsung Engineering Co. before the end of the year in a deal valued at about 2.5 trillion won (US$2.5 billion), according to regulatory filings from the two companies today.

Shareholders of the engineering company will get 2.36 shares in the vessel maker in a merger that’s based on share prices of 26,972 won for Samsung Heavy and 63,628 won for Samsung Engineering, according to the filing.

“This is the start of more restructuring that’s to be expected from heavy-industry companies within the Samsung Group,” said Kim Hyung Gun, an analyst at Meritz Securities Co. in Seoul. “The group seems to have decided that it needed to revamp the units because there

were too many overlapping areas, like in the construction business.”

Shares of both companies rose as the merger came amid a restructuring ahead of a potential succession at the top of the conglomerate. Lee Kun Hee, the 72-year-old chairman of phone- maker Samsung Electronics Co., has been hospitalized since suffering a heart attack in May, and the heir apparent is his only son, Lee Jae Yong. The family is planning to take public two businesses to comply with tighter government limits on chaebol and eventually help pay

The world is us North Korea tightens grip on phone SIM cards used by tourists James Pearson

I

n a move that makes it harder for North Koreans to gain illicit access to the global Internet, North Korea now only allows mobile phone SIM cards used by tourists to be active for the duration of their visit, tourism sources told Reuters.

Unlike North Koreans, foreigners visiting the isolated country can freely browse social media sites such as Facebook and Twitter using the Koryolink domestic network.

Under a change made in July, North Korea deactivates the card when a visitor leaves, ensuring

that it can not be left for use by a resident, the sources said. It can be reactivated when a visitor returns to the country.

“This basically means in practical terms that if someone leaves the country they can’t simply leave their phone with a local friend and have them use the Internet,” said one source, who declined to be identified due to the sensitivity of discussing such issues when working in North Korea.

The move could be linked to a broader crackdown on the exchange

of information in North Korea, and according to the source appeared to have been government-led.

More than 2.5 million North Koreans use the Koryolink network to make calls and browse an internal, heavily monitored domestic Internet. Foreigners can use the network too - but on a separate cell network that connects to the regular outside Internet. It was not clear if the new rule applied to contracts held by long-term residents or foreign diplomats.

Reuters

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September 2, 2014

Asia inheritance taxes that could exceed $5 billion.

Declining profit South Korea’s government has banned new cross-shareholdings and offered tax breaks for restructuring of chaebols to become more transparent.

One company going public is the Samsung Group’s de facto holding company, Cheil Industries, in which Jay Y. Lee, as the patriarch’s son is also called, holds a 25 percent stake.

Samsung Heavy rose 6.2 percent, the biggest jump since July 23, to close at 28,950 won in Seoul trading.

Samsung Engineering jumped 13 percent, the most since December 2008, to 71,900 won.

While Samsung Heavy will keep its name for now, the company may consider changing it later, the two companies said in a joint statement.

There won’t be any change to the workforce, they said. Samsung Heavy

has about 14,300 workers and Samsung Engineering about 7,000, according to their latest financial statements.

The combined entity plans to increase sales to 40 trillion won in 2020, from 25 trillion won last year.

‘Good merger’ “Through the merger, Samsung Heavy and Samsung Engineering will provide solutions for both onshore and offshore projects to customers,” the two companies said in the statement.

An extraordinary meeting will be held on Oct. 27 to seek approval from their shareholders.

Samsung Heavy will tap into Samsung Engineering’s expertise in project management and design while the engineering company will be able to broaden its business to the offshore sector, the companies said.

The two companies are already working together on offshore projects, including one in Nigeria.

Samsung Heavy’s profit has declined in recent years as slowing economic growth and excess capacity led to a drop in new orders. By combining the two companies, the Seoul-based shipbuilder plans to use Samsung Engineering’s expertise for its offshore projects.

“This merger will be good for Samsung Heavy in the long term,” said Cho Byung Hee, an analyst at Kiwoom Securities Co. in Seoul. “Samsung Heavy will be able to tap Samsung Engineering’s expertise and engineers to help it differentiate itself from other shipyards.”

First-half loss Samsung Heavy has been focusing on growing its offshore operations as overcapacity led to a drop in shipbuilding orders. Contracts for drilling and floating production facilities accounted for 71 percent of the US$37 billion orderbook at the

end of July.

Samsung Heavy posted a loss in the first half because delays in some of its offshore projects. The company, whose bigger rivals are Hyundai Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co., won US$5 billion in orders in the first seven months of this year, according to its website.

Samsung Engineering posted a loss last year, the first since 2003, because of delays in some of its overseas construction projects.

“This merger is the best option for Samsung Group, considering Samsung Engineering still has some losses to clear from overseas construction projects,” Kim at Meritz said.

Lee Kun-Hee, who took over from his father 27 years ago, is South Korea’s richest man, with a net worth of US$11.5 billion, as of Aug. 29, according to the Bloomberg Billionaires Index.

Bloomberg

From business to defence India, Japan to boost defence ties amid China tensions Hiroshi Hiyama

C

onservative soulmates Narendra Modi and Shinzo Abe hold formal talks in Tokyo yesterday to cement a blossoming relationship between India and Japan, on a visit that began with a bear hug and a tour of Kyoto.

The personal chemistry on show during the five-day tour is increasingly reflected in the strengthening of bonds between two countries that bookend an ever-more assertive China.

Modi, who is hoping his market-focused policies will give a boost to India’s floundering economy, could walk away with almost half a billion dollars’ worth of loans for much-needed infrastructure projects, reports said.

The visit is Modi’s first foreign trip outside the subcontinent and is intended to showcase the warming ties between Asia’s second and third largest economies.

As well as a gamut of business deals that could see a doubling of Japanese direct investment, and the 50 billion yen in low-interest loans for new railways, highways and industrial parks, the summit will also reinforce diplomatic and defence ties.

Japanese media reported that the two premiers are likely to agree on launching a “two-plus-two” security consultative framework

India’s Prime Minister Narendra Modi enjoys a cup of green tea next to Japan’s Prime Minister Shinzo Abe (right)

involving their foreign and defence ministers.

Japan already has such arrangements with the United States, Australia, Russia and France.

Both nations are wary of China’s growing ambition to be seen as the regional keystone and are keen to curb its activity in the East and South China Seas and in the Indian Ocean.

Tokyo and New Delhi both have long-running territorial disputes with Beijing, which is widely viewed as having more aggressively pushed its claims in recent years.

Underlining the point, Chinese coastguard ships sailed into waters off the Japanese-controlled Senkaku

islands yesterday, officials said. China calls the islands the Diaoyus.

Modi, in an address to a gathering of Japanese business leaders, said Japan and India must choose a path of peaceful development, not “18th century-style” expansionism.

“There are 18th-centurystyle ways and thinking that involve expanding (geographically) by taking away land of another nation and going into seas,” he said through a translator, without making any specific reference to China.

“If Asia is to become the leader in the 21st century, Japan and India should lead” and promote a path

of peaceful development, he said.

‘Upgrade’ In New Delhi, the Indian premier told Japanese media in an interview last week that the two nations could “upgrade” their relations in the fields of defence and security.

Abe and Modi are expected to agree on holding regular joint naval drills as well as exercises involving the United States, the Nikkei said yesterday.

Washington is eager for the two countries to step up their cooperation by way of counterweight to China, at a time its own military commitment around the world is being questioned.

Under Abe, Japan has taken a more robust attitude to defence, massaging the selfimposed restrictions banning it from acting in defence of allies under attack and loosening restrictions on the export of military kit.

Despite huge trade volumes, Japan and China have an uneasy relationship and Tokyo is keen to reduce its dependence on Beijing for imports such as rare earths, a group of metals vital for hightech manufacture.

India and Japan will also try to conclude talks on a civilian nuclear agreement that would allow Tokyo to export nuclear-related technology to New Delhi, reports have said.

AFP

14

September 2, 2014

International ‘Unreliable’ Putin

Euro zone factory EU’s next foreign policy chief says Putin hurting his own people Steve Scherer growth slows Euro zone manufacturing growth slowed slightly more than initially thought last month as new orders dwindled and factories suffered amid rising tensions in Ukraine, a business survey showed yesterday. Factories barely increased prices last month, and manufacturing activity in France fell at the fastest pace in 15 months, in disappointing news for the European Central Bank before Thursday’s monetary policy-setting meeting.

Germany posts budget surplus Germany posted a budget surplus of 16.1 billion euros in the first half of 2014, highlighting the strength of the country’s finances at a time when Berlin faces pressure to loosen the fiscal reins and spend more to boost flagging growth in Europe. The data from the Federal Statistics Office showed that the federal government posted a surplus of 4.0 billion euros in the first six months of the year, the first time it has not registered a deficit in the period since 1991. The overall surplus - grouping federal, state and local governments as well as the social security system - amounted to 1.1 percent of gross domestic product (GDP).

T

he European Union’s newly nominated foreign policy chief Federica Mogherini said Russian President Vladimir Putin’s Ukraine policy had resulted in economic sanctions that were hurting his own people.

Speaking in her first newspaper interview since being tapped for the job on Saturday, Mogherini told Italy’s Corriere della Sera yesterday that sanctions remained “a tool” in brokering what had to be a diplomatic resolution to the Ukraine fighting.

“The point is whether the impact that the sanctions are having on the Russian economy will change the rational behaviour of the leadership,” she said.

“At the moment, the Kremlin is acting against the interests of its people.”

On Sunday, EU leaders threatened Russia with more

trade sanctions if it failed to start reversing its actions in Ukraine, asking officials to draw up a new list of measures that could hit a range of sectors within the week.

The EU, along with the United States, first imposed sanctions on Moscow in March for annexing Crimea, and imposed trade restrictions on Russia’s financial and oil industries after a Malaysian airliner was shot down in July over separatist territory in the Ukraine, killing nearly 300 people, most of them Dutch.

Mogherini’s comments, unusually blunt for the 41-year-old who is currently Italy’s foreign minister, come after critics to her nomination said she may be soft on Moscow because of Italy’s dependence on Russian gas.

They also signal increased concern in Europe after Putin called on Sunday

Reuters

Criticism follows accusations of softness on Moscow

Apple Inc. plans to turn its next iPhone into a mobile wallet through a partnership with major payment networks, banks and retailers, according a person familiar with the situation. The agreement includes Visa Inc., MasterCard Inc. and American Express Co. and will be unveiled on Sept.

9 along with the next iPhone, said the person, who asked not to be identified because the talks are private. The new iPhone will make mobile payment easier by including a near-field communication chip for the first time, the person said. That advancement along with Touch ID, a fingerprint recognition reader that debuted on the most recent iPhone, will allow consumers to securely pay for items in a store with the touch of a finger.

Says calls for “statehood” may undermine Ukraine’s future Putin: West should exercise “common sense” in sanctions

Spanish takeover

CaixaBank to buy Barclays Spain businesses for US$1.1 Billion Charles Penty and Macarena Munoz

C

“I hope that common sense will prevail and we will work in a normal modern way, and that neither we nor our partners will bear the costs of these mutual jabs,” the agency reported him as saying.

Moscow has responded to sanctions so far by banning the import of most Western foodstuffs and shutting down McDonalds restaurants.

The 41-year-old Mogherini’s five-year appointment to take over in Brussels for Britain’s Catherine Ashton is subject to approval by the European Parliament and she would not take her post until November.

The Ukraine crisis erupted nine months ago when Ukrainian President Petro Poroshenko’s pro-Moscow predecessor rejected a free trade deal from the EU, triggering a popular uprising in which he was overthrown.

KEY POINTS

Apple to partner with Visa, MasterCard

aixaBank SA, Spain’s thirdbiggest lender, agreed to buy banking operations in the country from Barclays

for immediate talks on the “statehood” of southern and eastern Ukraine.

Mogherini said Putin’s statement could “further undermine the territorial integrity, the very endurance of the country” and accused the leader of being an unreliable diplomatic counterpart.

“Putin has never respected the commitments he made in several situations, in Geneva, in Normandy, in Berlin. He wasted the chance to turn things around by influencing the separatists after the shooting down of the Malaysian airplane.

The distance between commitments and concrete action has been enormous,” she said.

Putin said yesterday he hoped the West would exercise “common sense” in weighing new sanctions, according to Russian news agency Interfax.

Plc for about 800 million euros (US$1.1 billion) in cash to expand its business as economic growth picks up.

The sale includes retail banking, wealth and investment management and corporate banking businesses, CaixaBank, based in Barcelona, said in a statement. The price represents about 40 percent of the book value, it said.

CaixaBank will add about 270 branches to its existing network of 5,695 and boost its client base by 550,000 to more than 14 million by buying the businesses from Barclays with assets of about 22 billion euros. The purchase follows Banco Bilbao Vizcaya Argentaria SA’s decision in July to acquire

nationalized lender Catalunya Banc SA as the country’s economic recovery picks up momentum and spurs deals.

“The deal is relatively small for CaixaBank but we value it positively,” said Francisco Riquel and Rodrigo Vazquez, from N+1, a Spanish investment bank, in a research note to clients today. They said the transaction adds affluent clients and boosts CaixaBank’s presence in Madrid. N+1 has a “strong buy” recommendation on the lender.

Bloomberg

15

September 2, 2014

Opinion Business

wires

Leading reports from Asia’s best business newspapers

THE NATION

The Greater Depression

J. Bradford DeLong

Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research

State enterprises will be the key investors in the government’s Bt2.4-trillion infrastructure mega-projects between 2015 and 2022, according to the Public Debt Management Office’s bond-market adviser, Suwit Rojanavanich. He said up to 45 per cent or Bt1.08 trillion would be borrowed by stateowned enterprises, while another 10 per cent or about Bt240 billion would come out of the SOEs’ working capital. Some 20 per cent of the total or Bt480 billion would come from the general budget. Another 20 per cent would come through publicprivate partnerships, and 5 per cent or Bt120 million would come via infrastructure funds, he said.

JAPAN TODAY Suzuki Motor Corp has improved the Wagon R and Wagon R Stingray light cars. By combining the “mild hybrid system,” which has a simple structure and can lower costs, and an improved engine, Suzuki achieved a fuel efficiency of 32.4km/L (approx 76.2mpg) under the JC08 test mode, which is higher than that of any other twowheel-drive (2WD) light van (overall height: 1,550mm or higher). Conventional hybrid systems use a motor as a source of driving force.

CHINA DAILY China and Russia are to start construction of a joint natural gas pipeline in Russia’s eastern Siberia this weekend, in implementation of a natural gas supply contract signed between the two countries.

Chinese Vice Premier Zhang Gaoli flew in from Moscow to Yakutsk, the capital city of Russia’s Sakha (Yakutia) Republic, Sunday evening to attend a start-of-construction ceremony for the Russian part of the East Route of the China-Russia natural gas pipeline. Zhang’s attendance at the start-of-construction ceremony reflects the importance that the Chinese government attaches to the comprehensive strategic partnership with Russia.

THE STAR Corporate earnings growth in the second quarter ended June 30 is trailing strong economic expansion as companies struggle to pass down rising costs, while they focus on defending market share. Analysts feel that the rising cost of delivering goods and services was evident as companies saw their profit margins shrink. For instance, Telekom Malaysia Bhd (TM)’s net profit for its second quarter came in flat at RM425mil, as operating costs shot up 8.9%, which is faster than the 8% growth in revenue. CIMB Research expects TM’s profit margin to decline further in the coming quarters.

F

irst it was the 2007 financial crisis. Then it became the 2008 financial crisis. Next it was the downturn of 20082009. Finally, in mid-2009, it was dubbed the “Great Recession.” And, with the business cycle’s shift onto an upward trajectory in late 2009, the world breathed a collective a sigh of relief. We would not, it was believed, have to move on to the next label, which would inevitably contain the dreaded D-word.

But the sense of relief was premature. Contrary to the claims of politicians and their senior aides that the “summer of recovery” had arrived, the United States did not experience a V-shaped pattern of economic revival, as it did after the recessions of the late 1970s and early 1980s. And the US economy remained far below its previous growth trend.

Indeed, from 2005 to 2007, America’s real (inflationadjusted) GDP grew at just over 3% annually. During the 2009 trough, the figure was 11% lower – and it has since dropped by an additional 5%.

The situation is even worse in Europe. Instead of a weak recovery, the eurozone experienced a second-wave contraction beginning in 2010.

At the trough, the eurozone’s real GDP amounted to 8% less than the 1995-2007 trend; today, it is 15% lower.

Cumulative output losses relative to the 1995-2007 trends now stand at 78% of annual GDP for the US, and at 60% for the eurozone. That is an extraordinarily large amount of foregone prosperity – and a

far worse outcome than was expected. In 2007, nobody foresaw the decline in growth rates and potential output that statistical and policymaking agencies are now baking into their estimates.

By 2011, it was clear – at

in mid-2012 to 0.4% today.

He then argued that we can no longer assume that the drivers of this trend – such as a drop in food and energy prices, high unemployment, and the crisis in Ukraine – are temporary in nature.

A year and a half ago, those who expected a return by 2017 to the path of potential output estimated that the Great Recession would ultimately cost the North Atlantic economy about US$13 trillion in lost production. If such a five-year recovery began now it would mean losses of about US$20 trillion

least to me – that the Great Recession was no longer an accurate moniker. It was time to begin calling this episode “the Lesser Depression.”

But the story does not end there. Today, the North Atlantic economy faces two additional downward shocks.

The first, as Lorcan Roche Kelly of Agenda Research noted, was discussed by European Central Bank President Mario Draghi while extemporizing during a recent speech. Draghi began by acknowledging that, in Europe, inflation has declined from around 2.5%

In fact, inflation has been declining for so long that it is now threatening price stability – and inflation expectations continue to fall. The five-year swap rate – an indicator of medium-term inflation expectations – has fallen by 15 basis points since mid-2012, to less than 2%.

Moreover, as Draghi noted, real short- and medium-term rates have increased; longterm rates have not, owing to a decline in long-term nominal rates that extends far beyond the eurozone.

Draghi’s subsequent declaration that the ECB Governing

Council will use “all the available unconventional instruments” to safeguard price stability and anchor inflation expectations over the medium-to-long term is telling. The pretense that the eurozone is on a path toward recovery has collapsed; the only realistic way to read the financial markets is to anticipate a triple-dip recession.

Meanwhile, in the US, the Federal Reserve under Janet Yellen is no longer wondering whether it is appropriate to stop purchasing long-term assets and raise interest rates until there is a significant upturn in employment. Instead, despite the absence of a significant increase in employment or a substantial increase in inflation, the Fed already is cutting its asset purchases and considering when, not whether, to raise interest rates.

A year and a half ago, those who expected a return by 2017 to the path of potential output – whatever that would be – estimated that the Great Recession would ultimately cost the North Atlantic economy about 80% of one year’s GDP, or US$13 trillion, in lost production. If such a fiveyear recovery began now – a highly optimistic scenario – it would mean losses of about US$20 trillion. If, as seems more likely, the economy performs over the next five years as it has for the last two, then takes another five years to recover, a massive $35 trillion worth of wealth would be lost.

When do we admit that it is time to call what is happening by its true name?

Project Syndicate, 2014

16

September 2, 2014

Closing Kiev troops abandon airport

Yves Carcelle dies at 66

Ukrainian forces were forced to retreat from Lugansk airport in the face of a Russian troop attack and Moscow soldiers moved into key cities in the east yesterday. Putin accused Europe of ignoring the Ukrainian military’s “direct targeting” of civilians in the conflict and said the offensive pushed by insurgents there were simply an attempt to expel Kiev’s forces from residential areas.

Yves Carcelle, the former chief executive officer who turned Louis Vuitton into the world’s largest and most valuable luxury brand, has died. He was 66. Carcelle died on Sunday following a long illness, Paris- based LVMH Moet Hennessy Louis Vuitton SA, which owns Vuitton, said yesterday in a statement.

He was diagnosed with kidney cancer last year and died in Paris.

Oil supply rises Price falls below US$103 Christopher Johnson

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rent crude oil dipped below US$103 a barrel yesterday as data showed manufacturing growth faltering in Europe and China at a time of ample fuel supply.

Euro zone manufacturing growth slowed more than expected last month and factory activity in several key countries appeared to be stagnating. French factory output fell at its fastest in 15 months in August.

Chinese factory growth slipped to a three-month low in August as foreign and domestic demand cooled, muddying the outlook for demand from the world’s key consumer of most commodities.

Oil supply, meanwhile, is more than sufficient to meet demand, encouraging storage of oil and depressing prices.

Brent crude was 30 cents lower at US$102.89 a barrel.

U.S. crude traded 40 cents lower at US$95.56 a barrel.

Floor trading in the United States was closed yesterday for the Labor Day holiday.

“Crude prices appear to have stabilised,” said Michael Wittner, oil analyst at French bank Societe Generale.

“However, there are significant factors that will

prevent a near-term price recovery,” he added. “Exports of Libyan light sweet crude are growing, and increasing volumes of crude are being placed in storage, which will maintain downward pressure.”

Libya’s oil production has increased in recent months, rising to 700,000 barrels per

day (bpd), state-run National Oil Corp (NOC) said on Sunday, putting it 50,000 bpd higher than what was reported early last week.

Oil is finding some support from world political tensions.

Iraqi army and Kurdish forces have been battling Islamic State fighters in a push to break the Sunni

militants’ siege of a town in northern Iraq, while the United States carried out air strikes near the town.

But exports from Iraq’s southern oil port have remained unaffected by the fighting. Russia’s Gazprom Neft and Korea Gas Corp (KOGAS) said yesterday they had started commercial

production at the joint Iraqi Badra oilfield with initial output at 15,000 barrels per day (bpd).

Head of Russian oil major Rosneft, Igor Sechin, said Russian oil and gas companies will honour their supply contracts despite sanctions and tensions with the West.

Reuters

China Inc’s Q2 earnings bounce

Car bomb found at Philippines’ main airport

ales forecasts for Novartis’s new heart failure drug are being ramped up by analysts after strikingly good clinical trial results for a medicine doctors expect to transform treatment of the deadly disease. Shares in the Swiss drugmaker jumped over 3 percent to a record high yesterday as data for LCZ696 released at the weekend beat expectations, showing the medicine slashed deaths and hospitalisations, worked across all groups of patients, and had no serious side effects.

David Epstein, Novartis’ head of pharmaceuticals, said the launch of the drug next year promised to be the company’s most exciting ever. The results of a keenly-awaited clinical trial on LCZ696 were released at the annual meeting of the European Society of Cardiology on Saturday and published in the New England Journal of Medicine.

Investigators working on the study and the company itself believe it has potential to replace drugs that have been central to treating heart failure for a quarter of century, opening up a multi-billion dollar sales opportunity.

The net profits of China’s listed companies grew slightly faster in the second quarter in line with the country’s improving economic performance, although the first half was weaker than the same time last year, an official newspaper said yesterday.

Second-quarter profits grew 11.4 percent year on year from 8.08 percent in the first quarter, the Shanghai Securities News reported.

But year-on-year growth of 9.47 percent in the first half of this year lagged a rise of more than 11 percent in the first half of 2013, reflecting the longer-term slowdown in the world’s secondlargest economy.

China’s economic growth picked up slightly in the second quarter as a burst of government stimulus paid dividends, although analysts said Beijing would likely need to offer more support to meet its annual growth target of 7.5 percent as the property market hit hard times.

China’s 2,558 listed companies posted combined net profits of 1.27 trillion yuan (US$207 billion) in the first half of this year, the newspaper said.

Three people were arrested after a bomb was found in a van parked at Manila’s international airport, but there was no ongoing safety threat for travellers, authorities said yesterday. A utility vehicle containing an “improvised explosive device” was found at the airport’s terminal three car park, said a short report released by the National Bureau of Investigation. In brief comments to reporters, NBI director Virgilio Mendez refused to give many details about the incident, saying “there is an ongoing follow-up operation”. Other authorities involved in the investigation also declined to comment. But the terminal, which serves domestic flights as well as international airlines, operated as normal yesterday and the Manila International Airport Authority said there were no continuing threats. “(The authority) assures the public that (terminal three) and all other terminals remain safe and airport security personnel continue to stay vigilant in their respective areas,” it said in a statement.

The initial National Bureau of Investigation said four suspects were arrested, but Mendez later said only three men were in custody.

Reuters

Reuters

AFP

Novartis drug points to huge sales

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